R. Hunter Biden Should Declare Who Really Owns His New Ukrainian Employer, Burisma Holdings

Here’s last week’s big announcement, adorned by a photograph of an American with a faintly alarming rictus; oh yes, oh dear me, yes: Hunter Biden joins the team of Burisma Holdings:

Burisma Holdings, Ukraine’s largest private gas producer, has expanded its Board of Directors by bringing on Mr. R Hunter Biden as a new director.

R. Hunter Biden will be in charge of the Holdings’ legal unit and will provide support for the Company among international organizations. On his new appointment, he commented: “Burisma’s track record of innovations and industry leadership in the field of natural gas means that it can be a strong driver of a strong economy in Ukraine. As a new member of the Board, I believe that my assistance in consulting the Company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.”

Wholehearted approval was not universally forthcoming:

 Isn’t that a bit fishy? Why do you say that?

Because he’s the vice-president’s son! That’s a coincidence. “This is totally based on merit,” said Burisma’s chairman, Alan Apter.

He doesn’t sound very Ukrainian. He’s American, as is the other new board member, Devon Archer.

Who? Devon Archer, who works with Hunter Biden at Rosemont Seneca partners, which is half owned by Rosemont Capital, a private equity firm founded by Archer and Christopher Heinz.

Who? Christopher Heinz … John Kerry’s stepson.

I think Putin’s propaganda people can take a long weekend; their work is being done for them. What do you mean?

Hasn’t Joe Biden pledged to help Ukraine become more energy independent in the wake of its troubles with Russia? Well, yes.

And isn’t Burisma, as a domestic producer, well positioned to profit from rising gas prices caused by the conflict? Possibly, but Hunter Biden is a salaried board member, not an investor. According to anonymous sources in the Wall Street Journal, neither Rosemont Seneca nor Rosemont Capital has made any financial investment in Burisma.

So it’s not fishy at all? No one’s saying that.

Do say: “Somebody needs to get involved in Ukraine’s corporate governance, and it might as well be a clutch of rich, well-connected American dudes with weird first names.”

Don’t say: “Thanks, Dad.”

The White House did the best they could with the optics…

The White House shot down any notion of a conflict of interest with Hunter Biden’s appointment. In a statement provided to Business Insider, Joe Biden spokesperson Kendra Barkoff said Hunter’s appointment did not constitute an endorsement by the vice president.

“Hunter Biden is a private citizen and a lawyer. The Vice President does not endorse any particular company and has no involvement with this company,” Barkoff said. “For any additional questions, I refer you to Hunter’s office.”

Commenters at Daily Kos affirm pugnaciously that there’s nothing to see here:

So the Vice President’s son who has been a high powered lawyer for years who has passed the Bar in DC, CT and the Supreme Court with a speciality in international law and relations shouldn’t sit on company boards? Is this what you are trying to say?

For me, that’s final confirmation that there’s something to see here. But what?

Mollie Hemingway at The Federalist nails it. From her list of nine questions, numbers 7 and 9 are worth particular emphasis:

7. Why would a Ukrainian energy company want Devon Archer or Hunter Biden to serve on its board?

Assuming that they have been appointed to the board, the most innocent explanation is that the company wants to increase foreign direct investment and views Archer and Biden as having the experience to make that happen. Archer, for example, is a long-time investor and financier.

The most disturbing explanation is that the company is attempting to curry favor with the U.S. government by enlisting the services of the close family friend and campaign bundler of the Secretary of the State and the son of the vice president.

9. This has to be a hoax, right?

It’s so bizarre that you almost have to assume it’s a hoax. It sounds more like a cliched movie plot — a shady foreign oil company co-opts the vice president’s son in order to capture lucrative foreign investment contracts — than something that would actually happen in real life. But the indications as of this afternoon are that the board appointments actually happened, and that a Ukrainian energy company has retained the counsel of the vice president’s son and the Secretary of State’s close family friend and top campaign bundler.

Take question 9 first. The answer could indeed be “yes”.

However, it is not R. Hunter Biden’s appointment that is a hoax, nor Devon Archer’s; nor is it, for that matter, the appointment of the ex-President of Poland, Aleksander Kwasniewski, who is also on Burisma’s board, as of January. No, it’s Burisma itself that looks flaky, even on a casual inspection.

But surely, that would be a failure of due diligence on the part of messrs Biden, Archer and Kwasniewski? Indeed it would, but there is a most unfortunate precedent for such a failure, which you can read about here, at some length. To sum it up: in 2006 or so, two Bidens, James Biden (future VP’s brother) and our R. Hunter Biden (future VP’s son), wildly overpaid a drug-addicted very senior Moonie for a hedge fund marketing operation that was hugely exaggerating its size and success, and turned out to be distributing ponzis, including the giant Allen Stanford ponzi, second only to Madoff, and other eyecatching frauds, such as Ponta Negra, via a sales network that included brokers with visibly very terrible FINRA records.

None of this makes the Bidens look particularly astute. Much of it would have been very easy to pick up with proper due diligence.

By 2009, Hempton, FT Alphaville and Felix Salmon (linkfest) were all over the story. Bits of it even crept out into the print media.

Final point from Hempton:

Paradigm rejects that the notion that they actively participated in the alleged Ponta Negra scam.  That is an accusation I do not make.  I only make the suggestion that – through clumsiness and the failure to perform even the simplest due diligence – they lend their name to alleged scammers.

Which brings us, five years after the Paradigm scandal blew up, to R. Hunter Biden’s new job at Burisma Holdings, a company that has a mysterious past.

By way of due diligence, we need to make a little dive into some old SEC filings of a US OTC Stock, Sunrise Energy Resources (now called Green Technology Solutions). In their filing for the fiscal year ended December 31, 2003, filed 3 Dec 2004, we find the following in the notes to the financial statements:

Effective October 4, 2004, the Company and certain stockholders entered into a Stock Purchase Agreement and Plan of Reorganization (the “Agreement”) with the stockholders of Esko Pivnich (“EP”), an oil and gas production and development company incorporated and operating in the Republic of Ukraine, to acquire all of the outstanding shares of EP. The Company is to issue that number of shares which, when added to the 5 million shares sold to the EP stockholders in connection with this transaction by five of the Company’s foreign institutional stockholders, will result in the Company’s current stockholders retaining, in the aggregate, 9% of the enlarged company, which will then have 17 million shares issued and outstanding. There are a series of conditions precedent to closing of the transaction, including listing of the Company’s shares for trading on OTC “Pink Sheets”.

There is also a handy list of directors and executive officers of the company, including a youngster called Taras Burdeniy who, ten years later, is part of the team at Burisma.

In the filings for year end 2006, section “description of business” we find another deal:

On January 20, 2006, Sunrise Energy Resources, Inc. executed a share purchase agreement with the shareholders of Pari, Ltd. The board of directors of Sunrise Energy Resources, Inc. approved the transaction on February 9, 2006.

…and an address I’d like you to remember, EP’s offices in Ukraine, at 10a Ryleeva St., Kiev, Ukraine.

Sunrise chugs along producing a bit of oil and gas for a few years. But we are talking thousands of barrels, not millions: it is not some hydrocarbon Eldorado. At its peak, the operation is capitalized at about $20Mn.

But alas, a series of catastrophes is related in the 10-K filed on 31st March 2009: according to the geologist, Sunrise has zero proven reserves, which finishes them as an investment proposition. One of their funders, Millington Solutions, has called in its debt. Oh, and Sunrise has changed accountants.

In the same 10-K Burisma Holdings Limited, of 17 Gr Xenopolou Street, 3106, Limassol, Cyprus, puts in an appearance as the holder of just shy of 70% of Sunrise’s common stock.

It’s all recapped again in a preliminary info filing, Sept 4 2009. Upshot:

  1. Sunrise’s equity holders are wiped out. Since Burisma paid only a nominal fee for the privilege of holding 70% of the Sunrise equity, they probably don’t mind too much. As for the other 30%, who knows what they think; they have put no comments on the record.
  2. Millington Solutions waltz off with Sunrise’s wholly owned subsidiaries Esko Pivnich and Pari, both with the address 10a Ryleeva St., Kiev, Ukraine. Now debt-free, EP and Pari might at best have some underdeveloped mining assets to pick over.

Millington Solutions LLC (properly Millington Solutions Limited), formerly of Suite 401, 302 Regent Street, London, was deregistered in August 2009, mere months after the above shenanigans. Millington was rather an opaque entity, of a particularly English style. English company law allows companies to be directors of companies, which, while pleasingly recursive, doesn’t do much for transparency. Thus we find that the directors of Millington Solutions are:

Terthur Trading Limited, a BVI company which Opencorporates can’t tell me anything about, except that it directs or acts as secretary for another 1,065 companies just as opaque as Millington Solutions…

and

Lambert Investments Limited, which says it’s British, (although I couldn’t actually find a live British company called Lambert Investments Limited), directs 384 companies just as opaque as Millington Solutions, many still registered, and sometimes has a Cypriot co-director, Georgios Amerikanos, a director of 122 UK companies.

In other words, it’s a big shell company network of a classic British kind, with ownership and control completely obfuscated. The Companies Act 2006 introduced a requirement that at least one company director should be a flesh-and-blood human being (“natural person“), but as we can see, Millington Solutions got its work done just before that loophole was closed.

There’s another question. How is it that, 5 years after the utterly opaque Millington rode off into the sunset with Esko Pivnich and Pari, and Burisma Holdings was left empty-handed, it’s now Burisma Holdings who say they own Esko Pivnich and Pari? It’s all as murky as hell. If I were R. Hunter Biden, I wouldn’t touch it; but as we saw from the Paradigm saga, R. Hunter doesn’t look before he leaps.

Another thought: could it be that Millington, Burisma, Esko Pivnich and Pari were owned by the same one person all along? All this calling in of loans would then just be corporate kabuki: a tax dodge, say, or some sort of favour to an oligarch or politician…or just the final public move of a good old-fashioned penny stock scam.

This is what one careful Ukrainian journalist dug up in 2012:

…Burisma changed owners last year: instead of Zlochevsky and Lisin, the company was taken over by a Cypriot off-shore enterprise called Brociti Investments Ltd. Pari and Esko-Pivnich also changed their address: they moved from Kateryny Bilokur Street to 10a Rylyeyeva Street in Kyiv. A third company was already waiting for them in the same building – the above-mentioned Ukrnaftoburinnya.

The owners of Ukrnaftoburinnya, Pari, and Esko-Pivnich were finally confirmed through first-hand sources. Oleh Kanivets worked as CEO of Ukrnaftoburinnya for two years. He confirmed who actually controlled the above-mentioned companies to “Slidstvo.Info”.

”The Privat Group is the immediate owner. This company was founded by Mykola Zlochevsky some time ago, but he later sold his shares to the Privat Group”.

There’s that address again: 10a Ryleeva St., Kiev, Ukraine.

The identification of Privat Group as the owner of Burisma, though unconfirmed, is logical enough. Privat Group is a conglomerate controlled by the ferocious Ukrainian oligarch Ihor Kolomoisky.

Kolomoisky is one of the oligarchs charged with holding down the Eastern provinces of Ukraine, and recently mocked Putin, reputedly sensitive about his height, as a “schizophrenic shortarse” (apologies for the English intonation: American alternatives are invited); definitely a bridge-burning moment. Putin, meanwhile, shut down as much of Kolomoisky’s bank as he could, in Crimea and Moscow. I’m not sure who started it, but we can certainly mark it down as a first-rate spat.

While that was brewing up, Kolomoisky might well have wanted something that looked an American protector, and got it, in the form of the VP’s son. This line of thinking would neatly answer “The Federalist”’s other question: why would a Ukrainian energy company want Devon Archer or Hunter Biden to serve on its board?

Another guess: Kolomoisky is far too ebulliently Jewish to look like a neo-Nazi. A US connection with Kolomoisky might play well in circles keen to counter Russian complaints that the interim Kiev regime is dominated by “Fascists”.

One also still wonders how oil- and gas-rich those Burisma Holdings assets really are; they never amounted to much in the years 2003-2009; why are they so much better after another roll of the dice? R. Hunter Biden could always get the boss to call in a geologist, I suppose, in the name of transparency, and all. Is there new capital, provenance unknown? Or are there new permits, acquired under the deliriously corrupt Yanukovych regime? Or is there still nothing much to Burisma Holdings at all?

That’s far too many questions and guesses. What we can tell, from Forbes, is that our Ihor isn’t necessarily the most salubrious business partner:

An independent lawsuit between powerful players will not only be fascinating, because it sheds light on how Ukrainian business empires were created. It can also set a powerful precedent for solving corporate conflicts fairly and transparently.

Pinchuk’s suit, currently in English High Court, stems from an alleged breach of contract and breach of trust by the duo, Bogolyubov and Kolomoisky.

The nature of Pinchuk’s claim is simple: Bogolyubov and Kolomoisky are holding Pinchuk’s property illegally. Pinchuk’s suit asserts that they sold him a shell company, Alcross Commercial Ltd., for $143 million in 2005. They told Pinchuk that Alcross owned Krivorozhskiy Zhelezorudnyy Kombinat (KZhRK), a Ukrainian ore-mining company. In reality, Alcross was worthless. They have continuously promised to transfer the assets of KZhRK to Pinchuk but failed to do so—and then, in 2007, they turned around and sold about 50 percent of KZhRK to a third party. They thus sold a stake in a business they did not own.

Written evidence in the case is by no means extensive, it being common practice in the post Soviet time to do business in that way. The prima facie arguments in the claim look coherent enough to go to court. Bogolyubov’s lawyer declared that his client regards the claim “as misconceived and will be vigorously defending it.” The truth will come out only during the court proceedings. This will surely be fascinating to watch because, as I made clear earlier, there are colorful people involved in the dispute.

Bogolyubov and Kolomoisky fostered strong reputations as corporate raiders in the mid-2000s, becoming notorious for a series of hostile takeovers. Hostile takeovers Ukrainian style, that is, which often included the active involvement of Privat’s quasi-military teams. These schemes included, among others, a literal raid on the Kremenchuk steel plant in 2006, in which hundreds of hired rowdies armed with baseball bats, iron bars, gas and rubber bullet pistols and chainsaws forcibly took over the plant. More recently, Aerosvit Airlines, which according to the media was controlled by Mr. Kolomoisky, declared bankruptcy in 2012, stranding thousands of Ukrainians in Ukraine and abroad. The Financial Times, when reporting on Kolomoisky’s recent conflict with UK company JKX Oil & Gas, stated in no uncertain terms, that “in Ukraine they [Kolomoisky and Bogolyubov] are called ‘The Raiders’”.

Privat Group has been involved in several court cases and arbitration proceedings in the US, UK, and Sweden. In 2009, a US court made clear its distrust of Privat representatives: “the Court has become increasingly skeptical of these gentleman [at Privat] and the credibility of their statements.”

Back to R. Hunter Biden:

As a new member of the Board, I believe that my assistance in consulting the Company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.”

I suspect R. Hunter Biden, in his new role, will have as much impact as a fart in a thunderstorm, but let’s give him a chance. One modest way in which R. Hunter Biden could follow through on his job description would be to identify and declare who controls the apparently large and important company that he now works for. Assuming his boss’s boss allows him to tell us, let’s all see what R. Hunter’s bumbled into this time.

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24 comments

    1. Jim Haygood

      That was the one starring Tongsun Park, right?

      Or was it Billie Sol Estes? They’re all R. Hunter Biden lookalikes, anyway.

    1. SocraticGadfly

      Or, maybe it’s the Russkies, at bottom line. Sea of Azov? Russian-majority eastern Ukraine?

      Company Background:
      Burisma Holdings is a privately owned oil and gas company with assets in Ukraine and operating in the energy market since 2002. To date, the company holds a portfolio with permits to develop fields in the Dnieper-Donets, the Carpathian and the Azov-Kuban basins.

      Doing Putin’s work for him indeed.

  1. Carolinian

    Great stuff! What a wonderfully (which is to say horribly) absurd mess our elites have ensnared us in.

  2. Gordon

    Just check out the street view for that address on Google Maps. Sure looks like the headquarters of some big company to me.

  3. Thor's Hammer

    Or alternatively our Hunter is a simple foot soldier in the Dark State, and the multiple layers of Ponzi upon Ponzi are mere smoke screens to enable funneling bribe money to the USA’s favored Nazi allies in the Ukraine.

    I seem to have seen this movie before during the Central American wars when the CIA facilitated drug trafficking to fund its death squad clients. Or to put a contemporary light on that era, research the connection between Mitt Romney, Bain Capital’s seed money, and Salvadorian death squads.

  4. RUKidding

    Thanks for adding a whole lotta detail to this little story of what Gaffy Joe’s kid does for kicks and money. The writing is very clear, but it’s still difficult to follow the spaghetti strands of who owns what and who and when and how. Yikes.

    I enjoyed the parade of Obot apologist bloggers/sock puppets who dutifully came out from under their rocks to put the spin on R. Hunter Biden’s new excellent adventure in Ukraine. Yeah, right: R. Hunter Biden “just happens” to have the educational chops, training, *connections,* yadda yadda to just by happenstance make him the right person for this little job.

    As with prior posts, I sigh and say: I’ve seen this movie before, and we all know well how it goes. Buncha crooks doing criminal things, rapaciously ripping off the 99s while preening themselves around as the good guys. What a loada crap. R. Hunter Biden will somehow come out this little soire with a lot of money, and that’ll be that.

    I do enjoy the sub-plot of Kolomoisky mocking Putin for being short. Maybe we can send Putin an audio of Randy Newman’s song?

    1. jrs

      “Yeah, right: R. Hunter Biden “just happens” to have the educational chops, training, *connections,* yadda yadda to just by happenstance make him the right person for this little job.”

      It’s really odd isn’t it how only our elites and their connections are capable of doing anything. It’s why the same people fill the corporate boards and the governments and the NGOs … it’s just so hard to find competent people these days.

  5. JGordon

    Great to see that they’re no longer even trying; all that self righteous hypocrisy from the venal stooges running America (down the drain) was really getting kind of old. Although considering the recent proclivities of the Obama regime, I suppose it’s possible that they’ll just continue telling their increasingly transparent lies and rationalizations indefinitely–and then act incredulous/offended when people don’t buy them.

    By the way, I believe that the level of credibility of the regime has dropped sufficiently low that if they were accused of eating children every morning, and then denied it, it would seem entirely plausible that they do in fact eat children–their denial almost being proof positive of the fact. That is why I believe that the fine people here at NC are committing a grave blunder by dismissing things like Benghazi or the IRS tax scandal–merely by seeming to be aligned with the regime on some issue or another greatly weakens your own credibility.

    1. RUKidding

      There’s a lot to be discovered about Benghazi, but it’s not what scurrilous crook Daryll Issa is ginning up the Tea Partiers about. The rightwing very dubious “investigation” in Benghazi has little to do with what was actually happening there prior to the sh*t hitting the fan, who Ambassador Stephens really was & who he really worked for, and why Team USA has used Benghazi for decades for various dirty ops.

      The rightwing noise machine’s take on Benghazi is mainly about how dare an “N” word be in the white house, plus pre-2016 dissing of Hillary Clinton. I’m no fan of either Obama or HRC, but what the rightwing noise machine is saying about Benghazi is bogus, a waste of my valuable time and tax dollars. If & when the so-called “Republicans” wish to come to grips with reality & what Benghazi is truly all about, then, and only then, will I pay attention.

      Ditto with the IRS situation, which, from the research I’ve done, does not deserve to be called a scandal. More rightwing bogus b.s. to gin up the Dittoheads. I don’t have time for that crap. Wake me when the IRS starts really going after the big tax cheats in the 1%. That’s the real scandal. The rest is just distraction.

      1. jrs

        I suspect the IRS scandal is really just an attempt to make things that shouldn’t be tax exempt, tax exempt. Benghazi there’s does seem to be some actual scandal there (and of course the U.S. should never have been involved in Libya in the first place, U.S. imperialism is itself a scandal).

        1. sleepy

          Exactly.

          The only reason the ambassador was killed was because the US/Nato was at war in Libya, not because of some movie or because some bureaucrat lied.

          That war was–mostly–bipartisan, so there will be no questions about policy, only grandstanding about how the repubs can run that policy of empire better than the dems.

    2. Dan Kervick

      Yeah, that was my reaction. And this bullet point from the Guardian piece nails it:

      I think Putin’s propaganda people can take a long weekend; their work is being done for them.

      It almost looks like the O team is trying to extricate itself from it’s self-made political entanglements by discrediting its own policy.

  6. jrs

    “The White House shot down any notion of a conflict of interest with Hunter Biden’s appointment.

    “Hunter Biden is a private citizen and a lawyer. The Vice President does not endorse any particular company and has no involvement with this company,” Barkoff said.”

    Yes but if say the accusation was insider trading at a company would this “private citizen” schtick work? No of course it would not. Family of “insiders” are considered insiders by that law and can be legaly charged with insider trading. But somehow the Obysmal administration wants us to believe conflicts of interest too blatent not to fall afoul of “insider trade” laws are all about being a “private citizen” and they want a citizenry dumb enough to fall for it.

    1. Demeter

      Love that neologism: Obysmal. It perfectly describes and covers the style of the execution of the crimes; but not the crimes themselves. For that, treason might not be too strong a word…

  7. Eureka Springs

    As evidenced by most comments… there is nothing about this story which surprises or looks like a made for TV script anymore. Nothing at all unbelievable about it. If this story were a movie I would shoot my television or use it like golf… for a white noise sedative.

    But this is real life, all to predictable and filled with historic as well as ongoing precedence. The scum rises to the top. This is learned far before fraternal hazing 101. The rich and powerful have their way. Rule of law and basic decency be damned. You let your peeps fund, arm, and usher in a violent coup of/by fascists… and act surprised they’re in bed/profiting together? Disaster Capitalism is as neoliberal/conservative as it gets…it’s who we are…and what we do…. problem is there is less and less place to hide for the rest of us who would simply not like/refuse to live this way.

    Nice to see the journalistic digging…. but odds are its the same story under just about every rock.

  8. Roquentin

    Putting hunter Biden on the board of Burisma is odious, even by the revolving door nepotism standards of the US. When I first caught wind of this last week the mantra that you can never be cynical enough about US foreign policy came to mind. I take some consolation in knowing that most of the population doesn’t take the propaganda line about “spreading democracy” seriously anymore, even if the comments on Daily Kos amounted to putting shovels worth of sand over each other’s heads. It saddens me to see our government breaking another country and fanning the flames of civil war to line their pockets with oil money. At this point, I suppose it’s par for the course, even if they typically haven’t been brazen enough to do it in Europe in the past.

    Here’s to hoping they aren’t so stupid and blinded by greed that they let this Ukraine fiasco degenerate into open conflict with Russia…..

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